Despite the trials and tribulations of the last year, analysts are reporting that business confidence has risen to its highest level since early 2010, with demand for borrowing continuing to surge. Record-breaking changes have been seen among investments in equipment, plants and machinery, particularly in the country’s regional areas, with a 5.7% increase recorded during the December quarter.
It’s estimated that these conditions will be with us for the next 15 months, so many business owners are asking themselves whether they should also be jumping on the borrowing bandwagon to purchase equipment or vehicles for their business.
There are a few considerations when it comes to financing assets for your business in the current market.
Instant Asset Write-Off for Eligible Businesses
Did you know that eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use? When the pandemic first hit our shores, the Federal Government announced an increase to the Instant Asset Write-off Threshold from $30,000 to $150,000 as part of its COVID-19 stimulus package.
The scheme was originally applicable until 30 June 2020 before being extended until the end of the 2020 calendar year, so for businesses that purchased before the end of 2020, you must now install or use the asset prior to 30 June.
For assets purchased and first used (or installed) for a taxable purpose from 6 October 2020 to 30 June 2022, the instant asset write-off threshold does not apply. You can immediately deduct the business portion of the asset's cost under temporary full expensing. This is for small businesses that apply the simplified depreciation rules, although more info can be found on the ATO site for businesses that turn over more than $10M.
To discuss how the current market conditions or government incentives may impact you and your business, please get in contact with our asset finance experts today.